Wasatch Micro Cap Fund Exited Its Position in Xponential Fitness (XPOF)

Wasatch Global Investors, an asset management company, released its “Wasatch Micro-Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund was down -16.57% in the quarter, outperforming the benchmark Russell Microcap® Growth Index’s -17.75% return. U.S. equities fell in Q1, driven by tariffs, budget cuts, economic weakness, stagflation concerns, and AI-related companies, affecting micro-cap companies. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Wasatch Micro-Cap Fund highlighted stocks such as Xponential Fitness, Inc. (NYSE:XPOF). Xponential Fitness, Inc. (NYSE:XPOF) is a North America-based boutique fitness franchisor. The one-month return of Xponential Fitness, Inc. (NYSE:XPOF) was 9.32%, and its shares lost 2.97% of their value over the last 52 weeks. On May 27, 2025, Xponential Fitness, Inc. (NYSE:XPOF) stock closed at $9.15 per share with a market capitalization of $444.598 million.

Wasatch Micro-Cap Fund stated the following regarding Xponential Fitness, Inc. (NYSE:XPOF) in its Q1 2025 investor letter:

“Boutique health and wellness franchisor Xponential Fitness, Inc. (NYSE:XPOF) also detracted from performance. While its Club Pilates brand is healthy and profitable, other brands are not delivering sufficient economics for its franchisees to prosper. We exited our position in the quarter.”

A group of people in the fitness studio doing a yoga or pilates class.

Xponential Fitness, Inc. (NYSE:XPOF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Xponential Fitness, Inc. (NYSE:XPOF) at the end of the first quarter, which was 27 in the previous quarter. Xponential Fitness, Inc. (NYSE:XPOF) reported consolidated revenue of $76.9 million in the first quarter 2025, down 4% from Q1 2024. While we acknowledge the potential of Xponential Fitness, Inc. (NYSE:XPOF) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Xponential Fitness, Inc. (NYSE:XPOF) and shared Greystone Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.